Mortgage Rate News

Image by respres via Flickr

For the third month in a row, foreclosures have declined. October saw a decline in home owners ready to lose their homes. Thanks to programs aimed at helping home owners refinance or modify their loans, foreclosures have been slowing. However, as BloggingStocks reports, there are still concerns for the future:

The number of homeowners on the brink of losing their homes continued to decline in October for the third straight month, as foreclosure prevention programs helped more borrowers. But foreclosure filings are still up 19% from a year ago, reaching more than 332,000 households, or one in every 385 homes. Rising unemployment could threaten the stabilizing trend.

Programs to help at-risk home owners aren’t much good if these home owners do not have jobs that can provide income. Therefore the continued weakness in the labor market is providing some concern. Advance unemployment data for last week is offering some hope, though. Jobless claims appear to have dropped by quite a bit, bringing the number down to around 502,000. This is the lowest it’s been for months.

However, the fact remains that jobs are still being lost.  They are being lost at a slower rate, but they are still being lost nonetheless. A dramatic reduction in the pace of job losses will be needed in order to provide a solid basis for economic recovery and quiet fears of continued destabilization in other parts of the economy.

At any rate, there is optimism that slowing unemployment will help matters in the housing market, also leading to slowing foreclosures. And, as more people take advantage of government programs meant to help them afford their homes, there is a strong likelihood that they will not have to be subject to foreclosure. And that in turn may help keep the housing market from sliding back into another dip next year.

Image by Getty Images via Daylife

There has been a lot of focus lately on the fact that the first time home buyer tax credit has been extended, and and expanded to include some who have not bought a home yet. However, in all of this interest over buying a home, it is also important to consider refinancing. There are a number of advantages associated with refinancing. Dale Siegel, a mortgage expert, offers some advantages of refinancing in her recent book, The New Rules for Mortgages:

1. Lower mortgage interest rate: If you can get an interest rate of a point lower, it can be worth your while to refinance. You’ll pay less in interest, and less overall.
2. Shorten your mortgage term: If you are interested in shortening the amount of time you have to pay a mortgage, you can refinance to a lower term, such as a 10, 15, or 20 year loan. Just be sure you can afford the higher payments.
3. Reduce monthly payment: You can actually reduce your mortgage payment by refinancing to a longer term. This way, you spread out your payment, and lower how much you owe each month. However, you will pay more overall.
4. Consolidate debt: In some cases you can use a cash-out refinance to consolidate debt and make it easier to pay down. Just make sure that you understand the implications, and that you change your debt habits so that you aren’t just getting in deeper.
5. Use the equity in your home: Refinancing can help you access your home equity for use on home improvement projects, or to pay other expenses.
6. Pay down principle: You can also use a refinance as a chance to pay down some of the principle on your home, reducing how much you pay in the long run in terms of interest, and increasing your home equity.

It is important to carefully consider the costs associated with refinancing, and make sure that the benefits outweigh the costs.

Image by Getty Images via Daylife

Freddie Mac saw a 3rd quarter loss of $5 billion as foreclosures continue to cause problems and the economic climate makes things difficult for individuals. Freddie Mac also expects, at some point, to request more funds from the U.S. Treasury. HousingWire reports on the state of the housing market and the mortgage market:

“We continued to see some positive housing market developments, including higher volumes of home sales and modest increases in house prices in certain areas of the country,” said CEO Charles Haldeman. “However, we believe that factors like high unemployment, excess inventory and rising foreclosures will continue to impede a full recovery for some time and put further downward pressure on house prices. We expect to request additional funds from Treasury as this prolonged deterioration of market conditions continues to negatively impact our financial results.”

Guaranty programs continue to see government support as the Obama Administration moves to help guaranty loans and provide insurance so that people can refinance their homes or get loan modification. However, it may not be enough. Foreclosure continue to mount, and these programs are still largely voluntary on the part of mortgage lenders. Additionally, loans need to be serviced by Fannie or Freddie in order for borrowers  to take advantage of many of the programs.

In the end, there is still a long way to go. Freddie Mac is likely to see more quarters of loss. Fannie Mae is also expected to continue to struggle. Fannie is also looking into more help from the Treasury Department’s senior preferred stock purchase program. It will be a long road ahead, but with Congress extending the first time home buyer credit, and other programs continuing, it is likely that the government will attempt to support the housing market for quite some time. The only question is whether or not the housing market will be able to survive without government help down the road.